UPDATE 1-Japan retail fund value rises to $650 bln in August

* Overall "toushin" value up 1.1 pct to 59.4 trln yen

* Steady inflows seen, but yen's rise limits gain in value

* Value of stock funds up for 7th straight month (Adds details)

TOKYO, Sept 11 (Reuters) - The value of Japanese retail- targeted mutual funds rose for the seventh consecutive month to $650 billion in August due to strong inflows into stock and bond funds, an industry body said on Friday.

Gains in share prices, with the benchmark Nikkei share average .N225 advancing 1.3 percent in August, helped push up the overall value.

But the yen's strength undermined the rise in the value of retail-targeted investment trust funds, or "toushins", as large portion of the funds invest in overseas instruments.

The Japanese currency rose nearly 3 percent against the dollar during the month.

The overall value of toushins rose 624.3 billion yen, or 1.1 percent, from the previous month to 59.4 trillion yen in August, the highest since September 2008, Japan's Investment Trusts Association said.

Overall net inflows totalled 529 billion yen in August, down 8.4 percent from 577.9 billion yen the previous month.

The value of stock investment trust funds, which make up about 80 percent of the total, rose for the seventh straight month to 47.8 trillion yen, up 0.8 percent or 385.1 billion yen from July.

Stock funds saw net inflows of 290.2 billion yen, down from 391.1 billion yen in July.

Solid inflows were seen in international equity funds and funds of hedge funds, while outflows were seen in domestic stock funds, the association said.

The value of bond funds rose 251.2 billion yen, or 2.8 percent, to 9.1 trillion yen in August.

Retail-targeted trust fund holdings of foreign stocks, bonds and money market instruments increased by 280 billion yen to 26.9 trillion yen in August, the association said.

Foreign stock investments fell by 9.2 billion yen to 5.5 trillion yen, making up 20.5 percent of total overseas asset holdings.

Foreign bond holdings dropped by 82.8 billion yen to 17.1 trillion yen, comprising 63.5 percent of total overseas holdings.

The value of privately placed investment trust funds, bought mainly by institutions, rose 1.3 percent, or 366.8 billion yen, to 29 trillion yen in August. ($1=91.36 yen) (Reporting by Chikafumi Hodo; Editing by Joseph Radford)